Dealmaking picked up for Texas lawyers this past week, with 12 transactions announced worth $5.3 billion, triple the previous week’s activity when there were nine deals worth $1.8 billion. The value was still off from the year-to-date high of $16.5 billion achieved in January.
Six law firms and 61 attorneys were involved in the transactions, versus the previous week’s 10 firms and 44 lawyers.
Jones Day dominated the headlines, advising Procter & Gamble, the Signature Group, Sun Country Airlines and BenefitMall. Vinson & Elkins scored three energy-related transactions while Kirkland & Ellis, Locke Lord, King & Spalding and Porter Hedges each hit singles.
The details show how diverse the Texas economy has become – even though about a third of the state’s employment growth recently has been fueled by oil and gas. Industry deals ranged outside oil and gas to include consumer products and employee benefits to cemeteries, used cars and airlines.
Jones Day advises P&G on $4.2B acquisition of Merck KGaA unit
Jones Day said April 19 it advised Procter & Gamble on its acquisition of the consumer health business of Germany’s Merck KGaA for $4.2 billion.
Considine has worked with Cincinnati-based P&G on cross-border deals before, including several brand divestitures overseas. In 2016 he advised the company on the $2.9 billion sale of its Duracell battery business to billionaire Warren Buffett’s Berkshire Hathaway.
P&G hopes the acquisition will expand its consumer health care business and complement its brands such as Vicks, Metamucil, Pepto-Bismol, Crest and Oral-B. That unit generated $7.5 billion in sales in the company’s last fiscal year, about 12 percent of its total revenue.
The business will replace a joint venture P&G is terminating with Teva Pharmaceuticals that sold over-the-counter medicines, vitamins and supplements and generated $1.2 billion in sales last year, P&G said.
P&G was thought to have had discussions with Pfizer to buy its consumer health care business, which is three times the size of the Merck KGaA business with such brands as Advil, Centrum and ChapStick.
Merck KGaA, which isn’t affiliated with U.S. drug maker Merck & Co., generates $1 billion in annual sales from the business, which includes 10 brands sold in 40 markets overseas. It sold the unit to focus on prescription drugs.
P&G recently ceded a board seat to activist investor Nelson Peltz, ending what’s been called the most expensive proxy battle, ever.
V&E advises SCF Partners on $800M ninth fund
SCF Partners has raised $800 million for its ninth fund and Vinson & Elkins had a part in making it happen.
A source said partner Mark Proctor in New York worked on the fund’s formation and fundraising before he left in March for Willkie Farr & Gallagher. That work was taken over by Vinson & Elkins partner Chris Rowley in Dallas once Proctor announced his departure, a source said.
The new fund is 33 percent larger than its last fund, which raised $600 million in 2012.
The Houston-based private equity firm, which is led by chairman L.E. Simmons, focuses on investments in energy services and equipment with offices in Houston, Calgary, Aberdeen and Singapore.
Jones Day assists Signature Group on sale to Park Lawn for $123M
Jones Day worked on another sizeable deal this week, advising the cemetery and funeral home owner Signature Group on its sale to PLC Signature, an affiliate of Park Lawn, for $123 million.
Dykema assisted Toronto-based Park Lawn on the transaction out of Michigan.
Jones Day partner Jeff Dinerstein led the deal team from Houston. He’s been Signature’s outside counsel for several years, advising it on its acquisition of Daniels Family Funeral Services while at Haynes and Boone in 2012. After he joined Jones Day in 2014, he assisted it on its acquisition of funeral and cemetery assets from Service Corporation International as part of a Federal Trade Commission mandated divestiture.
The transaction, which was announced April 16, is expected to close before the end of the third quarter.
Park Lawn also is purchasing Cidadel Management, which has cemeteries and funeral homes in North and South Carolina, for $13.4 million.
The acquisitions are part of Park Lawn’s plan to expand in the U.S. market. They will add 38 cemeteries, 29 funeral homes and 5 crematoria in six new states to its portfolio while expanding its Texas footprint.
Signature Group COO Jay Dodds and CEO Brad Green will be taking on senior leadership positions within Park Lawn.
Park Lawn management expects Signature to generate $32.9 million in sales and $9.6 million in EBITDA in the first year after the deal closes, which would represent a multiple of 9.8 times EBITDA with synergies. Citadel is expected to generate $15.5 million in sales and $2.5 million in EBITDA, which would represent a multiple of 5.4 times EBITDA with synergies.
V&E advises Daseke on its $102M merger with Aveda
Vinson & Elkins said April 17 that it advised Daseke on its acquisition of Werklund Capital-backed Aveda Transportation and Energy Services for $102 million.
Also advising were associates Austin Elder and Desi Baca (corporate); partner Chris Dawe and associates Rafa Alvarado and Marco Chan (finance); partner Randy Jurgensmeyer and associate Courtney Hammond (real estate); counsel Larry Pechacek and associate Ross Woessner (environmental); partner Brian Bloom (executive compensation/benefits); partner Vanessa Griffith (labor/employment); and counsel Scott Brown (intellectual property).
The team was based in Dallas except for Gibson, who is in Austin, and Pechacek, Woessner and Brown, who are in Houston.
Burstall Winger Zammit and Miller Thompson in Canada counseled Aveda.
Soumit Roy is Daseke’s general cousel. He joined the company in September after working at Ferguson Braswell Fraser Kubasta in Dallas and as assistant general counsel and global transactional counsel at Whole Foods Market, corporate counsel at Expedia and general counsel for brands at hotels.com and TripAdvisor.com. Before that the University of Texas-trained lawyer was an attorney at Texas Instruments, Anadarko Petroleum and Bracewell.
The deal, which involves 71 cents per share in cash or stock plus debt assumption, is expected to close in June.
Addison-based Daseke is the largest owner of flatbed and specialized transportation and logistics solutions in North America. Aveda is one of the largest oil rig moving companies on the continent with 430 tractors, 660 trailers and 200 light-duty trucks in all seven of the major U.S. oil basins.
Aveda has expanded its quarterly sales under CEO Ronnie Witherspoon to $41.9 million versus $7 million with EBITDA of $2.8 million. It generated $12.6 million in EBITDA on sales of $158 million last year and its machinery and equipment were valued at $90 million in November.
Chairman and CEO Don Daseke said in a statement that the transaction is part of the company’s strategy to enter specialized niches.
Carvana acquires Mark Cuban’s Car360 for $22M
Carvana paid $21.9 million for Car360, a company backed by Dallas billionaire Mark Cuban that provides computer vision and interactive 360-degree imagery to help car sellers show their vehicles.
Outside counsel couldn’t be ascertained by press time. Adam Boyd, associate general counsel at the Mark Cuban Cos. in Dallas, said he couldn’t provide any information on the transaction due to strict confidentiality obligations in the agreements. Robert Hart is Mark Cuban Cos.’ general counsel.
The deal involved $6.7 million in cash and shares worth $15.2 million. It closed April 12.
Founded in 2012, Phoenix-based Carvana is an online platform for buying and selling cars. The company is known for its used-car “vending machines” for customers to pick up the vehicles they bought online. It went public last year, raising $300 million, and previously purchased automobile marketplace Carlypso in August.
Cuban agreed to invest in Atlanta-based Car360 (then known as Cycloramic) in 2013 after its founder Bruno Francois appeared on the CNBC TV show Shark Tank. The company ended up raising $3.55 million from investors last year, including from BIP Capital and Cuban’s Radical Investments.
Francois, CEO John Hanger and chief computer vision scientist Grant Schindler are staying on.
Jones Day advises Sun Country Airlines on sale to Apollo
Jones Day said April 16 it was antitrust counsel to Sun Country Airlines on its sale to Apollo Global Management. The deal closed April 16.
Apollo announced the deal in December without disclosing terms. Barclays provided financial advice to the airline.
Eagan, Minnesota-based Sun Country Airlines is the largest privately-held, fully independent airline in the U.S. and was owned by billionaire brothers Marty and Mitch Davis. It specializes in flying passengers from cold weather locales to warm weather destinations. It currently flies 2.5 million passengers per year.
Sun Country CEO Jude Bricker – who previously was COO at troubled Allegiant Air – will remain in his post.
Sun Country was formed in 1983 by former Twin Cities-based pilots and flight attendants of Braniff International Airways, which shuttered in 1982. The Davis brothers acquired it after its second bankruptcy. It earned $5 million on $136 million in sales in the third quarter, according to a report.
Apollo said in February it planned to shed 350 workers from Sun Country’s ground service operations at Minneapolis-St. Paul International Airport to make it more efficient.
Earlier this month, the airline upset passengers when a flight from Los Cabos, Mexico, to Minneapolis was canceled because of snow and that the airline didn’t have any later flights because the season was ending. It did offer passengers a full refund so they could book a return flight on another airline.
Jones Day advises BenefitMall on Slattery acquisition
Jones Day said April 17 that it advised employee benefits and payroll services provider BenefitMall on its acquisition of Slattery, a benefits wholesale general agency in New Jersey, for undisclosed terms.
Slattery used inhouse counsel at its parent, Arthur J. Gallagher & Co. in Chicago.
The Jones Day team was led by Dallas partner James O’Bannon, who also advised BenefitMall on its sale in December to the Carlyle Group. Wachtell Lipton lawyers in New York had advised Carlyle on the buyout while DLA Piper lawyers in Austin had assisted investor Austin Ventures.
Dallas-based BenefitMall claims to be the leading provider of employee benefits and payroll services with a network of 20,000 brokers and CPA’s serving 200,000 small and medium-sized businesses. It also owns the second largest privately held payroll company, CompuPay, and operates HealthCareExchange.com, the online community for information regarding the Patient Protection and Affordable Care Act.
CEO Scott Kirksey said in a statement that the acquisition expands BenefitMall’s footprint in New Jersey and contributes to the company’s plans for continued, strategic growth.
BenefitMall will gain an office in Holmdel, New Jersey, which will increase service provided to brokers throughout the tri-state area; and Whippany, New Jersey, which will fold into the nearby BenefitMall office in Livingston.
V&E aids Ward Energy Partners on asset sale
Vinson & Elkins said April 18 it advised Trilantic Capital Management-backed Ward Energy Partners on its oil and gas property sale in Adams and Weld Counties in Colorado to an unnamed buyer for an undisclosed sum.
The V&E corporate team was led by partner John B. Connally with assistance from senior associate Tan Lu and associates Emma Jiang and Josh Rocha, all of Houston.
Also advising were partner Brian Moss and associates Alex Kamel and Caitlin Lawrence in Houston on finance and partner Todd Way and senior associate Julia Pashin in Dallas on tax.
Ward used Evercore as its financial adviser.
V&E also advised Ward when it sold its Scoop and Hoxbar assets in October, also to an unnamed buyer for an undisclosed sum. And the law firm counseled Trilantic when it backed Ward in the summer of 2014 along with Ward Petroleum, which used Hall Estill.
The assets are prospective for the Codell and Niobrara reservoirs in the Denver-Julesburg basin in Colorado.
Kirkland & Ellis aids Salt Creek on partnership with Ares, ARM
Kirkland & Ellis said April 16 it counseled Salt Creek Midstream on a partnership with Ares Management and Houston-based ARM Energy Holdings to develop Salt Creek Midstream in West Texas’ and New Mexico’s Delaware Basin.
The Kirkland team was led by corporate partners Bill Benitez, Cyril Jones and Jonathan Castelan and included debt finance partner Lucas Spivey and associate Ryan Copeland and tax partner Mark Dundon, all of Houston.
Salt Creek Midstream is owned by funds managed by Ares Private Equity Group and ARM Energy. ARM Midstream Management, a unit of ARM Energy, will serve as operator of the project.
Once fully operational, Salt Creek primarily will include several cryogenic processing facilities as well as gas and crude gathering pipelines, compression and treating facilities.
The initial phase is expected to be commissioned this month and have 260 million cubic feet per day of processing capacity by the end of the year. Salt Creek already has secured commitments for 250,000 dedicated acres from multiple Delaware Basin producers, which are expected to provide decades of high-return drilling inventory that could drive more project growth and scale in a rapidly expanding basin.
Salt Creek also announced the successful close of its $350 million term loan facility with Deutsche Bank as sole arranger and underwriter. The proceeds will be used to fund further development and expansion of the project.
Locke Lord reps White Deer-backed Deep Well on Sun Energy purchase
Locke Lord said April 19 that it represented White Deer Energy-backed Deep Well Services on its purchase of Sun Energy Services for an undisclosed sum.
The team was led by Houston partner Joe Perillo, who has advised White Deer on several deals in the past. Other members included partners Alicia Castro, Laura Ferguson, Jerry Higdon, Eric Larson and Buddy Sanders, senior counsel DeLaina Mulcahy and associates Lauren Corbeil, A.J. Davitt, Jeff McPhaul, Nick Moore and Burke Wendt, all of Houston. Partner Van Jolas also pitched in from Dallas.
Metz Lewis Brodman Must O’Keefe of Pittsburgh and New York advised Sun Energy.
Sun Energy Service provides snubbing, well servicing, workover and other related services in connection with oil and gas well drilling, completion, production and well maintenance.
King & Spalding aids Exterran on asset sale to Castle Harlan
New York private equity firm Castle Harlan acquired the North American production equipment manufacturing assets of Houston-based Exterran for undisclosed terms.
An Exterran spokesman said its inside counsel was deputy general counsel Kelly Battle. She was assisted by King & Spalding led by partner Roxanne Almaraz and associate Casey Ragan, both of Houston.
Castle Harlan was represented by Arnold & Porter out of New York.
Valerie Banner is general counsel of Exterran, having joined as special counsel in 2007 and been appointed to the top legal post the following year.
Before the merger of Hanover Compressor and Universal Compression in 2007 that created Exterran, Banner had been special counsel at Universal since 2000 and general counsel between 1998 and 2000. Before that, she was counsel for several publicly traded companies and in private practice, beginning her career as an associate at Andrews & Kurth.
Castle Harlan claims that the newly named Titan Production Equipment will be a market leader in the design, engineering and manufacturing of oil and gas production equipment used to separate, process and treat hydrocarbon streams at the wellhead, gathering and processing stages of production.
The business specializes in custom and made-to-order products, including two- and three-phase separators and glycol regeneration dehydrators.
As part of the transaction, Titan Production Equipment will become Exterran’s preferred supplier of production equipment in the U.S. and Canada.
The sale is expected to close this summer. Former and current managers of the assets will be investors in Titan Production Equipment and operate the new business, with former Exterran senior VP Chris Werner becoming CEO.
Eric Schwartz, Castle Harlan’s managing director, said in a statement that the production equipment market faces constrained capacity, in which customers experience long lead-times, limited engineering support and product quality issues.
The acquisition includes Exterran’s 210,000-square-foot manufacturing facility in Columbus, Texas, that has the capacity to make more than 4,000 units per year. Castle Harlan said that the facility is recognized as one of the top in the industry with a fit-for-purpose layout for high volume, complex manufacturing.
Castle Harlan has a historical relationship with Exterran, beginning when the private equity firm acquired Universal Compression from Tidewater in 1998. Universal completed a public offering of its common stock in 2000 and then merged with Hanover seven years later.
Porter Hedges assists RigNet on purchase of oil and gas services providers
Porter Hedges said April 19 it advised Houston-based RigNet on its purchase of two oil and gas services providers, Automation Communications Engineering, or Auto-Comm, and Safety Controls, or Safcon, for undisclosed terms.
The Porter Hedges team was led by partner Joe Morrel with assistance from associate Allison Wilbanks, both of Houston.
Brad Eastman is general counsel of RigNet. He previously was general counsel of Schlumberger unit Cameron Group and deputy general counsel of Cameron International before Schlumberger bought it in 2016. The Harvard-trained attorney began his legal career as a law clerk for the Western District of Texas before joining Sullivan & Cromwell in New York and later Brobeck, Phelger & Harrison in Austin. He also served as general counsel of Input/Output and Quanta Services.
Auto-Comm provides communications services for onshore and offshore remote locations to the oil and gas industry while Safcon offers safety, security and maintenance services to the sector.
RigNet, which is led by CEO Steven Pickett, said the acquisitions will expand its services in the industry, add value across its systems integration and managed communications services businesses and strengthen its relationships with oil and gas explorers and producers.
The deals follow RigNet’s purchase of Brazilian oil and gas predictive analytics provider Intelie that closed last month. Mayer Brown partner Robert “Bob” Gray in Houston counseled RigNet on that deal.